Mortgage Application Volume Ignores Holiday, Purchases Make Strong Showing

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Despite the Independence
Day holiday which both shortened and bisected the week, mortgage activity
rallied significantly
during the week
ended July 6.  The Mortgage Bankers
Association said its Market Composite Index, a measure of mortgage application
volume, increased 2.5 percent on a seasonally adjusted basis compared to the
week ended June 30.  The holiday did take
a toll on the unadjusted numbers with the overall index dropping 18 percent.

The week’s results were
driven by strong growth in the volume of purchase mortgage applications. That
index was up 7 percent from the previous week on a seasonally adjusted basis
although it declined 15 percent unadjusted. The unadjusted index was 8 percent
higher than during the same week in 2017.

The Refinance Index lost
another 4 percent, falling to its lowest level since December 2000. The
refinancing share also established a new recent low, declining to 34.8 percent
of total applications, the smallest since August 2008. The previous week the share
was 37.2 percent.

 

Refi Index vs 30yr Fixed

 

 

Purchase Index vs 30yr Fixed

 

 

FHA
applications accounted for 10.0 percent of the total submitted during the week compared
to 10.2 percent the previous week while VA applications increased to 11.3
percent from 10.7 percent. The USDA share of total applications was unchanged
at 0.8 percent.  

Interest
rates, both contract and effective, declined again for most fixed rate
mortgages (FRMs).  The exception was the
FHA backed 30-year FRM. That rate increased from 4.78 percent with 0.73 point
to 4.80 percent with 0.74 point. The effective rate also increased.  

The average
contract interest rate for 30-year FRMs with origination balances under the
conforming limit of $453,100 fell to 4.76 percent from 4.79 percent.  Points increased to 0.43 from  0.41 and the effective rate moved lower.

The contract rate
for jumbo 30-year FRM, loans with balances exceeding the conforming limit,
averaged 4.68 percent compared to 4.71 percent the previous week.  Points dropped from 0.43 to 0.24 and the effective
rate decreased. 

Rates for 15-year FRM
were down week-over-week by 4 basis points to an average of 4.18 percent.  Points ticked down to 0.46 from 0.47 and the
effective also decreased.

The
contract interest rate for 5/1 ARMs increased to its highest level since MBA
started tracking the product in January 2011. 
The average rate surged by 10 basis points to 4.13 percent, further
closing the gap with longer term fixed rates. Points increased to 0.36 from
0.25 and the effective rate also moved higher. 
The ARM share of mortgage applications retreated from 6.7 percent to 6.3
percent.

MBA’s
Weekly Mortgage Applications Survey has been conducted since 1990 and covers
over 75 percent of all U.S. retail residential mortgage applications.  Respondents include mortgage bankers,
commercial banks and thrifts.  Base
period and value for all indexes is March 16, 1990=100 and interest rate information
is based on loans with an 80 percent loan-to-value ratio and points that
include the origination fee.

 



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